Before the open, the Dow component and technology bellwether shocked the market in a good way when it provided preliminary fourth quarter revenue and earnings per share figures that were comfortably above the current consensus estimates. Specifically, IBM (IBM 102.93, +5.26) reported revenues of $28.9 billion and earnings of $2.80 per share versus analysts' expectations that called for revenue of $27.8 billion and earnings of $2.60 per share.
IBM attributed its performance to strong international growth and a weaker dollar. This news gave the futures market a noticeable lift that carried over to the cash market when trading began.
Fittingly, the tech sector (+2.6%) played an instrumental role in Monday's rally effort which was also spearheaded by the materials sector (+3.5%). The latter benefited from continued gains in commodity prices that were pushed up by a weaker dollar, which was pressured by the market's interest rate cut expectations. Gold futures scored another record close at $910 a troy ounce.
For the most part, slowdown concerns were set aside Monday as other economically-sensitive areas, such as the industrials sector (+1.3%), led by the transportation stocks, and the energy sector (+1.5%), also outperformed the broader market, which gained 1.1%. Conversely, defensive-oriented outlets, such as health care (-0.5%) and consumer staples (-0.2%), underperformed.
Weakness in Merck (MRK 59.78, -0.77) and Schering-Plough (SGP 25.52, -2.21) weighed heavily on health care and came after a study conducted by the companies revealed there was no clear advantage in taking their Vytorin drug versus a cheaper alternative.
Elsewhere, the financial sector (+1.0%) had a decent outing despite reports Citigroup (C 29.06, +0.50) could report a write-down of as much as $24 billion when it posts its fourth quarter results before the start of trading on Tuesday.
The market, apparently, took some solace in the idea that the larger the write-down, the better, as it will contribute to a belief that the worst of the suffering has been felt and that the stocks are closer to a bottom.
Weakness in Monday's session was limited largely to company-specific issues. Eight out of ten economic sectors ended the day higher and the major indices closed near their best levels of the day.
Despite the strength in the stock market, the Treasury market held its ground. The benchmark 10-year note was essentially unchanged with its yield remaining at 3.78%.DJ30 +171.85 DJTA +2.3% NASDAQ +38.36 NQ100 +1.9% R2K +1.1% SP400 +1.0% SP500 +15.23 NASDAQ Dec/Adv/Vol 1222/1802/2.16 bln NYSE Dec/Adv/Vol 1032/2128/1.25 bln
3:25 pm : Stocks climb higher and then pull back. The major indices are still holding onto hefty gains. Financials (+0.8%) are now performing on par with the broader market, after underperforming for most of the session.
Earlier today, Credit Suisse raised its rating on U.S. stocks to Overweight from Benchmark for the first time in ten years according to Bloomberg.com. The firm cited the central bank's commitment to economic growth.
Earnings reports tomorrow morning from Citigroup (C 29.10, +0.54) and US Bancorp (USB 30.31, +0.46) will likely command the market's attention. Analysts expect Citi to report a loss of $1.00 per share, compared to gain of $1.03 a year ago. US Bancorp is expected to report earnings of $0.59 per share, down about 11% from last year.
Apple (AAPL 178.04, +5.35) will also receive attention as CEO Steve Jobs is giving his keynote address at 12:00 ET at Macworld Expo. Jobs typically unveils new products, and there has been much speculation and anticipation of what new products Apple will unveil.DJ30 +150.55 NASDAQ +35.59 SP500 +12.88 NASDAQ Dec/Adv/Vol 1143/1832/1.68 bln NYSE Dec/Adv/Vol 1038/2084/950 mln
3:00 pm : Stocks extend their gains, climbing to fresh session highs in a broad-based push. Tech (+2.7%) is lifting the broader market, as 13 of its 14 groups trend higher. Computer storage & peripherals (+4.4%) is posting the largest gain, while data processors (-0.9%) is the sole sector in the red.
On the economic front tomorrow, December retail sales, Producer Price Index (PPI), and the NY Empire State Index are set for release at 8:30. Briefing.com expects retail sales to be flat, and for PPI to edge up a slight 0.2%.DJ30 +170.14 NASDAQ +37.95 SP500 +13.99 NASDAQ Dec/Adv/Vol 1177/1782/1.55 bln NYSE Dec/Adv/Vol 1047/2073/884 mln
2:30 pm : Some choppy action as the major indices retreat a bit and then climb to session highs. The gains have been broad-based, with the exception of health care (-0.7%) and consumer staples (-0.3%), which have not seen much buying interest.
Looking ahead, fourth quarter earnings are expected to decline by 11.3%, according to Thomson Financial. The main source of the earnings decline are financials, with an expected decrease of 72%. If the financial sector is removed from the S&P 500, earnings are expected to increase by 11.6%.
Of the 31 companies that have reported so far, 61% have beat analyst expectations, 19% have met expectations, and 19% have been below expectations, according to Thomson Financial. These numbers are near historical levels, although the sample size is small as earnings season has just gotten underway.DJ30 +150.95 NASDAQ +34.67 SP500 +11.90 NASDAQ Dec/Adv/Vol 1264/1684/1.42 bln NYSE Dec/Adv/Vol 1101/2021/823 mln
2:00 pm : The Dow climbs to a fresh intraday high, led by surge in farming and construction machinery manufacturer Caterpillar (CAT 67.35, +1.34).
Shares of consumer electronic company Harman International Industries (HAR 46.29, -22.68) have plummeted in this session's trade. The stock is down 33% after the company cut its full-year guidance well below analysts' expectation. Shares were hit hard a few months ago after KKR and Goldman Sachs Group backed out of their planned $8 billion buyout of the company due to concerns about its business and financial condition. Shares are down 63% from their 52-week high.
The consumer electronics group (-33%) is the worst performing S&P 500 industry group this session, as Harman is the lone stock within the group. The news has also weighed on shares of GPS maker Garmin (GRMN 70.13, -1.27).DJ30 +154.29 NASDAQ +32.21 SP500 +11.71 NASDAQ Dec/Adv/Vol 1267/1670/1.29 bln NYSE Dec/Adv/Vol 1215/1892/727 mln
1:30 pm : Stocks continue to climb higher and then stall a bit. The tech (+2.1%) and materials (+2.4%) sectors continue to pace this session's advance.
Only five of the 30 Dow components are trending lower this session. Merck (MRK 59.33, -1.22) and Altria (MO 78.25, -0.77) are the main laggards as both stocks pull back a bit after outperforming as of late. IBM (IBM 103.32, +5.62) is providing leadership, and is also giving a boost to the second-best performing Dow component, Hewlett-Packard (HPQ 46.11, +1.11).DJ30 +122.83 NASDAQ +22.87 SP500 +7.62 NASDAQ Dec/Adv/Vol 1301/1613/1.18 bln NYSE Dec/Adv/Vol 1216/1872/661 mln
1:00 pm : Stocks are back on the rise after drifting lower for most of the past half-hour. Eight of the ten sectors are trading higher.
On issues, advancers outpace decliners by nearly a 1.5-to-1 margin on the NYSE, and new 52 week lows outpace new highs by 3.5-to-1. On the Nasdaq, advancers outpace decliners by 5-to-4, and new 52 week lows outpace new highs by 7.5-to-1.DJ30 +119.50 NASDAQ +22.06 SP500 +7.84 NASDAQ Dec/Adv/Vol 1287/1606/1.05 bln NYSE Dec/Adv/Vol 1256/1802/585 mln
12:30 pm : Stocks give up some gains as financials (-0.1%) once again fall below the unchanged mark.
Fourth quarter earnings season is underway with 28 S&P 500 companies reporting this week, according to Thomson Financial. Reportings get into full gear the following two weeks, with 85 S&P companies reporting next week, and 98 reporting the week after next.
Five Dow components will be reporting this week, including Citigroup (C 28.77, +0.21), Intel (INTC 22.83, +0.84), JP Morgan Chase (JPM 40.94, +0.08), IBM (IBM 103.47, +5.80) and General Electric (GE 35.32, +0.15).DJ30 +90.48 NASDAQ +18.00 SP500 +6.00 NASDAQ Dec/Adv/Vol 1275/1594/973 mln NYSE Dec/Adv/Vol 1181/1873/536 mln
12:05 pm : The stock market got a welcome boost on Monday after Dow component IBM (IBM 103.70, +6.02) reported preliminary fourth quarter results that topped analysts' expectations.
IBM reported earnings of $2.80 per share, topping expectations by $0.20 and representing a 24% increase compared to year ago earnings. The company said the results were driven by "strong operational performance in Asia, Europe and emerging countries." The company will provide full results on Thursday, January 17.
Apple (AAPL 177.30, +4.61) is posting an impressive gain. Banc of America raised its fiscal first quarter earnings estimates on Apple, citing strong computer demand.
Strength in Apple and IBM helped vault technology (+2.3%) into a leadership position. Tech is one the worst-performing sectors this year, as it was down 9.5% before today's open.
Retailers are trading mixed, but are managing to post a 0.6% gain after Home Depot (HD 25.05, +0.34) and Lowe's (LOW 20.73, +0.42) were upgraded to Outperform from Neutral at Credit Suisse. On the negative side, shares of Sears Holdings (SHLD 90.04, -6.13) are sharply lower after the company lowered its fourth quarter outlook this morning.
There was continued speculation on the size of Citigroup's (C 28.78, +0.22) fourth quarter write-down, on how much capital it is seeking, and possible layoffs at the firm. A CNBC reporter stated his sources are telling him that Citi may write-down $24 billion in assets in the fourth quarter and layoff 17,000 to 24,000 employees over a one year period. Investors will receive some answers tomorrow morning, as Citigroup is the first of five Dow components to report earnings this week.
Eight of the ten sectors are leaning higher, led by tech (+2.3%) and materials (+2.4%). Healthcare (-0.6%), and consumer staples (-0.1%) are in the red.
Commodities made gains as gold (+1.3% to $909.30) hit fresh all-time highs, and the dollar fell as traders increased their bets on a Jan. 30 rate cut. Fed funds futures suggest a 44% chance of a 75 basis point cut and a 56% chance of a 3.75% rate cut.
There aren't any economic releases today.DJ30 +111.29 NASDAQ +24.97 SP500 +8.66 NASDAQ Dec/Adv/Vol 1180/1643/854 mln NYSE Dec/Adv/Vol 1095/1925/460 mln
11:30 am : The major indices climb to fresh intraday highs and then pullback a bit. Some of the better performing sectors this year, consumer staples (-0.2%) and healthcare (-0.4%), are seeing some weakness.
A CNBC reporter said his sources are telling him that Citigroup (C 28.83, +0.26) CEO Pandit will address the company's employees after its earnings results tomorrow. Pandit is expected to announce 17,000 to 24,000 layoffs spread out over a one year period. Citigroup has roughly 330,000 employees. The firm is also expected to write-down its assets up to $24 billion.DJ30 +117.87 NASDAQ +30.00 SP500 +10.10 NASDAQ Dec/Adv/Vol 1022/1768/714 mln NYSE Dec/Adv/Vol 991/1997/368 mln
11:00 am : The major indices climb higher and are trading slightly below session highs as financials (+0.5%) recover into the green. Technology (+2.5%) continues to provide leadership, which is aiding in the outperformance of the Nasdaq Composite. The Dow is also posting strong gains thanks to the surge in Dow component IBM (IBM 103.67, +6.00)
Shares of retailer Sears Holdings (SHLD $88.58, -7.59) are under pressure after the company lowered its fourth quarter outlook this morning. The company expects fourth quarter earnings of $2.59 to $3.48 per share, well below the consensus estimate that called for earnings of $4.43 per share. The company's stock is down nearly 55% from its 52-week high.DJ30 +136.40 NASDAQ +27.84 SP500 +11.37 NASDAQ Dec/Adv/Vol 1085/1660/549 mln NYSE Dec/Adv/Vol 990/1922/274 mln
10:30 am : Stocks regain some ground, but remain off their highs that were reached shortly after the opening bell.
In commodity trading, gold (+0.7% to $903.70) hit a fresh all-time high as it surpassed $910 per ounce before pulling back a bit. Platinum also hit an all-time high in overnight trade. Crude oil is up 0.5% to $93.67.
In currency trading, the dollar is down 0.65% against the euro and 0.83% against the yen. The Dollar Index is down 0.62%.
The weakness in the dollar and strength in commodities is being attributed to increased expectations of a rate cut on Jan. 30. Fed funds futures suggest a 42% chance of a 75 basis point cut to 3.50%, with the rest of the bets on a 50 basis point cut. This is up from last week, when futures suggested a 32% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut.DJ30 +100.33 NASDAQ +25.36 SP500 +8.10 NASDAQ Dec/Adv/Vol 985/1647/358 mln NYSE Dec/Adv/Vol 1069/1743/153 mln
10:00 am : Stocks dip off their opening highs as three of the ten sectors slip into the red. Notably, the highly influential financial sector (-0.3%) is posting a loss as the thrifts & mortgages group (-1.9%) faces selling pressure.
Tech is providing leadership (+2.0%), boosted by the better than expected earnings at IBM (104.57, +6.90). Apple (AAPL 176.15, +3.61) is also giving the sector a boost. Banc of America raised its fiscal first quarter earnings estimates on Apple, citing strong computer demand.DJ30 +92.18 NASDAQ +22.84 SP500 +7.38 NASDAQ Dec/Adv/Vol 778/1658/161 mln
09:40 am : Stocks open on a high note after IBM (IBM) said fourth quarter earnings rose 24% over last year in a preannouncement. The firm reported earnings of $3.80 per share, topping analysts' expectations by $0.20. The firm said the results were driven by strong growth in Asia, Europe and emerging countries.
Stock futures were pointing to a modestly higher open and then spiked after the IBM announcement.
DJ30 +104.86 NASDAQ +22.53 SP500 +8.58
09:16 am : S&P futures vs fair value: +11.0. Nasdaq futures vs fair value: +23.3.
08:59 am : S&P futures vs fair value: +11.6. Nasdaq futures vs fair value: +21.5. It is still shaping up to be a strong market for the stock market. Citigroup (C) is higher in pre-market trading despite a CNBC report that suggests the firm’s fourth quarter write-down could be as much as $24 billion dollars. Citigroup is slated to report its earnings before the open on Tuesday.
08:30 am : S&P futures vs fair value: +10.2. Nasdaq futures vs fair value: +21.5. A higher start is expected. Beaten down retailers Home Depot (HD) and Lowe’s (LOW) are higher in pre-market trading after being upgraded to Outperform from Neutral at Credit Suisse. In commodity trading, gold (+1.5% to $911.10) and platinum hit fresh all-time highs in overnight trade.
08:00 am : S&P futures vs fair value: +10.1. Nasdaq futures vs fair value: +18.0. Futures point to a noticeably higher start. A fourth quarter earnings preannouncement from IBM is driving the positive sentiment. IBM expects fourth quarter earnings of $2.80 per share compared to the consensus of $2.60. IBM said strong operational performance in Asia, Europe and emerging countries led to the better than expected results. On the negative side, Sears Holdings (SHLD) warned of fourth quarter earnings shortfall.
06:16 am : S&P futures vs fair value: +5.3. Nasdaq futures vs fair value: +6.3.
06:16 am : FTSE...6219.90...+17.90...+0.3%. DAX...7746.78...+28.83...+0.4%.
06:16 am : Nikkei...Holiday......... Hang Seng...26468.13...-398.88...-1.5%.
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